6 Ağustos 2012 Pazartesi

Akbank Report

Akbank 2Q12 Earnings Update: Opex tailed the high growth and good asset quality
·                     Akbank reported TRY 535mn bank-only net profit in 2Q12 (-4% q/q and -16% y/y), well below the market consensus estimate of TRY 603mn (YF: TRY 641mn) and delivering a quarterly RoE of 11.5%.

·                     1H12 bank-only net earnings of Akbank came in at TRY 1,091mn marking 21% y/y earnings contraction and delivering an annualized RoE of 11.8%. Please note that Akbank management guides for 14% RoE for 2012FY.
·                     Although the top-line performance of the bank came strictly parallel to our estimates, higher than expected opex and lower than operating income resulted in a huge differentiation with our estimate and the reported bottom-line.
·                     Briefly speaking, Akbank’s 2Q12 financials can be summarized with high growth in loans, broadly sustained asset quality but high opex growth. We maintain our Marketperform recommendation for Akbank with a 12-m target price of TRY 7.30/share. While main positives of Akbank can be sorted as (i) the diminishing cost of funding, (ii) the accumulated CPI gains amounting ~TRY 160mn and, (iii) the strong NFI growth backed by lending expansion; we have some concerns mainly originating from (i) the loan growth that biased to riskier segments such as credit cards and SMEs and, (ii) the high opex growth curtailing the cost/income ratio of the bank.
·                     NIM improved a bit by 9bps q/q. Despite the core spreads improved significantly both on the Lira and FX side respectively by 35bps q/q and 70bps q/q, low yield on CPI linkers overshadowed further NIM improvement. As loan growth dominated with retail and SME segments Akbank enjoyed from rising loan yields. Moreover the flattish Lira deposit growth rate in 2Q12 helped for a favourable deposit pricing.
·                     High loan growth. While Lira loan book expanded by 7.4% q/q, FX loans grew by 6.7% q/q. Except auto loans retail and commercial & instalment loans expanded by around 10% q/q across the board. As Lira deposits remained flattish over the previous period, loans/deposits ratio on the Lira side jumped by around 8pps q/q to 106%, which calls for moderate NIM formation in the coming quarters. Akbank expects 10%-12% y/y deposit growth in 2012FY (7.6% ytd as end of 1H12), which may slightly lower the loans/deposits ratio. Besides, Akbank guides for 57% loans/assets ratio for 2012YE, which is parallel to the current level, ad corresponding to 16%-18% loan growth for 2012FY (13.5% ytd as end of 1H12).
·                     Opex growth rate guidance revised upwards to 14%. Total opex growth was read at 18% y/y in 2Q12, bringing the 1H12 y/y growth rate to 15%, which is 100bps higher compared to the bank’s revised guidance for 2012FY. Not only 24 branch openings in 1H12 (46 new brances in the last one year) but also the high growth rate of 12.6% in the per head HR costs are responsible for the high opex growth rate.
·                     NFI growth normalizes. Following the 9% y/y NFI growth in 1Q12, the growth rate decelerated to 3% y/y bringing the 1H12 annual NFI growth rate to 6%. That said by the bank, new regulations have been fully applied for NFI recording. We think Akbank’s massive loan growth rates in retail and commercial & instalment loans had helped for such a high NFI growth rate in 1H12, unlike the banking sector in general. Akbank guides for 7%-8% NFI growth rate for 2012FY, which is achievable in our opinion considering the growth appetite of the bank.
·                     Asset quality remained on track and the NPL ratio is further down by 8bps q/q to 1.64%. Although Akbank saw 33% q/q growth in net NPL inflow, we do not think it is a major distortion given the low base effect. We haven’t seen a major deterioration in the quarterly cost-of-risk ratio, which remained almost unchanged at 70bps in 2Q12. The bank guides for 40bps CoR ratio for 2012FY (at most 50bps), which stood at 40bps according to bank’s own calculation methodology. The obvious fact is the downward normalization in NPL recoveries, which is an outcome of the slow-down in economic activity. As such reported other operating income of Akbank came well below compared to our estimate.

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